What Are The Three Most Common Bookkeeping Errors?
While bookkeeping is rarely high on a business owner’s list, it is one of the most essential tasks necessary for a business’ success. The information that effective bookkeeping provides is an important aid to business planning, reporting and goal setting, among other things. Without accurate and timely financial reports, it’s quite difficult to understand how the company is performing and identify key trends which may need attention. Whether you’re a start-up or established company, it can be difficult to maintain completely accurate records, which may invalidate the benefits of timely reporting. The good news is that your bookkeeping process can be refined by simply looking out for common issues and errors. To help our clients, prospects and others spot and correct these issues, GBQ has outlined the more common bookkeeping errors below.
Common Bookkeeping Errors
- Improper System Set Up – Financial statements can provide a great deal of information about your business including performance, efficiency, margins and even areas of opportunity and improvement. It’s similar to a roadmap that can reveal an optimal product/service mix, insights on profit margins and where you are spending and investing resources. Unfortunately, since most business owners don’t realize their accounting software can provide this information, they don’t know to ask for it. The full benefit of the financial reporting process is missed because management is bereft of the information needed to make well informed decisions.
- Not Reconciling Financial Data Regularly – Reconciling involves going line-by-line through your business records or program and comparing them with your bank statement to be sure there are no discrepancies. Reconciling your ledger at least once a month, along with more thorough quarterly and annual reports, will help you keep track of all income and expenses going through your bank account. This process allows you to gain a clearer understanding of your financial picture, helps to avoid forgetting an item or the specifics of an expense, highlights weaknesses in your processes that need to be addressed and avoids or detects any fraudulent activity.
- Trying to Do It Yourself – Once your business starts growing, the possibility of missing certain data or a critical step increases dramatically. There are many ways an outsourced bookkeeper can keep your finances on track, including offering valuable tax planning advice, managing tasks like payroll and accounts payable and streamlining processes to help you focus solely on service and product development, marketing and other important business matters. Beyond this, since these professionals work with dozens of companies they often have access to best practices and information on emerging trends that others do not. This means these professionals can bring unique insight to the process that others are often unable to offer.
Proper bookkeeping is the foundation for effective and efficient business management. When it’s not handled with the necessary attention to detail or investment of time, the outcome can be inaccurate reporting, missed opportunities and more. If you would like assistance with your company’s bookkeeping or have questions about proper financial management, GBQ can help. For additional information, please contact us at (614) 532-5700 or firstname.lastname@example.org. We look forward to speaking with you soon.